Source · Select Committees · Public Accounts Committee
Recommendation 18
18
In its examinations of the local government sector prior to the pandemic, our previous Committee...
Conclusion
In its examinations of the local government sector prior to the pandemic, our previous Committee raised concerns in 2018 that “the Department may not know if pressures in one service area quickly transfer to others or the extent of the risk that this poses to local authorities or service users” due to insufficient data.42 In 2019 we remained similarly concerned that the Department was not fully evidencing financial sustainability using expectations across the full range of local authority services.43 When we asked about the immediate prospects for the sector, the Department told us that the local government finance settlement for 2021–22, which provides authorities with their grant funding levels and other key financial parameters, would allow, “the sector to stabilise and be sustainable.” It also explained that it had a degree of confidence in the sustainability of the sector in relation to the immediate and short-term impacts of the pandemic. The Department told us that it had been clear that “there would be financial impacts on local authorities” but suggested this would not necessarily affect services due to authorities finding efficiencies rather than reducing service provision, and the use of reserves. We asked the Department about the impact of over a decade of financial pressure on the ability of local authorities to make further efficiency savings. The Department responded by saying it recognised the pressures that authorities are managing and had consequently enabled real-terms funding increases in the last few years. It did not provide further explanation of its confidence in authorities’ ability to make widespread efficiencies.44
Government Response
Acknowledged
HM Government
Acknowledged
2a: PAC recommendation: The Department should draw on the experience of collecting data during the COVID-19 pandemic to improve its regular collections of local government financial data. In particular, it should write to us by October 2021, setting out: i) what, if any, changes it plans to make to its regular collections based on its experience of data collection and use in the pandemic; 2.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 2.2 The department agrees that the Local authority COVID-19 financial impact monthly monitoring collection has been a valuable source of information. The collection was developed at pace in Spring 2020, and has evolved continuously, benefitting from extremely high response rates and engagement. To date, 12 rounds of information have been published. The process has been informed by close sector collaboration, and the data are collected on a voluntary basis, in recognition of the pressures local authorities are facing. 2.3 The monthly monitoring returns have been a valuable source of evidence, providing near-real time data at a time of significant volatility. These figures are, however, based on self- reported ‘best estimates’, and are management information rather than official certified returns and should therefore be treated with appropriate caution. This contrasts with regular data collection where timeliness is less important and greater accuracy and assurance desired. 2.4 The department has recently launched a review of pre-existing local government finance data collections, and the review's first steering group met on 15 June 2021. The review will consider issues around local authority expenditure and borrowing data, consult stakeholders to identify which data needs are currently being met, and prioritise changes to consider. In addition, the review will set out recommendations for a sustainable process for identifying and implementing changes. The department will consider the future of the monitoring collection as part of this review. 2.5 The department will write to the Committee in October 2021 to provide an update on the review and how it is taking forwards the lessons learned.